A lot of companies seem to have trouble living up to their mottos these days. United’s “friendly skies” are looking decidedly hostile as the company faces backlash for ordering airport security officers to violently remove a passenger from an overbooked plane.
Meanwhile, Uber’s website claims that “When you make transportation as reliable as running water, everyone benefits.” But recent charges of sexual harassment and driver manipulation at the company suggest that Uber may not be invested in benefiting everyone. Thinx, the period underwear company, declares, “By reimagining feminine hygiene products to provide support, comfort, confidence, and peace of mind, we aim to eliminate shame, empowering women and girls around the world.” Yet the alleged actions of former Thinx CEO Miki Agrawal—from denying her employees sufficient maternity leave to groping her colleague’s breasts—hardly seem designed to empower the women who worked for her.
Each of these scandals arises from the same predicament: When companies place material success and self-interest over the essential values distinguishing them from competitors, things tend to head south. Fast. According to Nick Tasler, organizational psychologist and author of The Impulse Factor: An Innovative Approach to Decision Making, one way to avoid such a fate is to make sure that your company abides by a guiding principle known as a “decision pulse.”
The problem with mission statements that list company values like “integrity,” “risk-taking,” or “honesty,” says Tasler, is that they’re too vague for employees to act on in material ways. If I’m a store manager at a clothing shop, it’s hard to use “integrity” to figure out whether to sell overalls. Or I may wind up using “risk-taking” to justify irresponsible actions.
Decision pulses feature what mission statements often lack: specificity and simplicity. A decision pulse is a single strategic direction or identity, one level below the company’s “vision,” that makes corporate strategy actionable.
As an example, Tasler points to Starbucks, which plateaued in 2007 after 20 years of steady growth. Company stocks had plummeted 50% in one year. Chairman Howard Schultz, who had catapulted Starbucks to global prominence as CEO from 1987-2000, took the reigns back as chief executive in January 2008.
Schultz’s “transformation agenda” included various priorities, from stabilizing its US business to improving emotional connections with global customers. But every move was guided by one directive, outlined in Schultz’s 2008 letter to employees, which he frequently repeated: “Starbucks needs to reassert its coffee authority.”
This became Schultz’s decision pulse, says Tasler. Dunkin’ Donuts could make cheap pastries, and McDonald’s could make addictive egg-and-cheese biscuits. But no one could invest as much money and research in coffee as Starbucks could. Coffee was the single element most responsible for Starbucks’ success thus far; therefore anything detracting from an excellent coffee experience had to go.
Schultz put muscle behind his “coffee authority” game plan with two big moves. In February 2008, he closed every US Starbucks (7,100 stores) for 3.5 hours to teach every barista how to make a perfect espresso. Starbucks lost $6 million in one day, but took a definitive step toward ensuring that every espresso beverage was authoritatively excellent.
Later that year, despite massive push-back, Schultz nixed breakfast sandwiches. Customers had loved the sandwiches, and they accounted for 3% of annual profit. But every time one was cooked, cheese melted onto the toaster grate, which meant customers smelt burnt cheese, instead of fresh coffee, upon entering Starbucks. Schultz’s colleagues, looking at the numbers, thought the move was crazy. But the “coffee authority” had to smell like coffee, so that was that.
Schultz also introduced several other key changes related to his underlying goal, introducing Swiss-made espresso machines, requiring whole beans to be ground in stores, and ordering that coffee be tossed after 30 minutes. The psychological impact of these moves on Schultz’s global team was profound.
“All of the sudden, every store manager at every Starbucks worldwide understood ‘Okay, Schultz is really serious about this, he is really putting this idea of coffee authority ahead of even our sales goals,'” says Tasler. “Understanding this simple, intense decision pulse allowed every Starbucks employee to become more creative without direction from the top, as they knew what to prioritize when making decisions.” Driven to make their stores appear authoritatively coffee-centric, managers globally began de-cluttering store shelves that had been stocked with CDs, stuffed animals, or books just to earn extra cash. Lo and behold, by 2011, Starbucks shares and profits were even higher than they had been before its meltdown.
Starbucks is not alone in finding success driven by decision-pulse principles. Angela Ahrendts became CEO of Burberry in 2006, when luxury clothing was one of the fastest-growing sectors worldwide. The British brand should have been booming; instead, it was growing only 2% per year. One glaring issue struck Ahrendts when she attended her first strategic meeting with employees: “They had flown in from around the world to classic British weather, gray and damp, but not one of the more than 60 people was wearing a Burberry trench coat,” she says in Tasler’s book.
As with Starbucks, global expansion had led Burberry astray from the single product most responsible for its success: The iconic Burberry trench coat, first designed in by Thomas Burberry in 1901 for English military officers, then transformed to a 20th-century British wardrobe staple.
Upon researching industry competition, Ahrendts and her team “discovered that Burberry was virtually the only successful global luxury brand not capitalizing on the product that made it famous,” writes Tasler. “Most of Luis Vitton’s sales still came from luggage. Gucci still earned most of its money from leather goods. Burberry’s flagship outerwear, on the other hand, accounted for only one-fifth of Burberry’s global business. Much like breakfast sandwiches at Starbucks, Burberry’s trademark checkered accessories had begun distracting its team from its true core.”
Despite skepticism within and outside the company, Ahrendts decided that Burberry’s decision pulse would be to focus on its British heritage: its sturdy outerwear foundation. The strategy worked: Burberry tripled its headcount and doubled both its sales and profits within Ahrendts’ first five years.
Using a narrow decision pulse to guide company decisions could seem limiting, even stifling. However, the act of intentional limiting—which leaders often see as antithetical to growth—actually helps employees build a focused, successful brand. As Steve Jobs said, “Innovation is saying no to 1,000 things.”
So what’s the best way for business leaders to settle on their company’s decision pulse? First, they should accept that even if they understand the organization’s overarching goal, their employees may need more clarification. (Even at the healthiest companies, 25% of employees are unclear about their company’s direction, according to a 2011 McKinsey & Company study (pdf) cited in The Impulse Factor.) Then, leaders should ask one question: “Who are we?” The answer should succinctly summarize the one thing that makes the company uniquely valuable to customers.
“Then focus,” writes Tasler, “Focus like your livelihood depends on it. Focus on something new. Focus on something old. If it makes you feel better, pay someone to tell you what to focus on. Just focus on something. Your team will reward you for it.”